Aviation: Liabilities of Owner, Operator, Financier, Lessor & More

Liability of Aircraft Operators

On 15 July 2009, New York city witnessed a ‘Miracle on the Hudson River’ when flight 1549 departed New York but shortly after the take-off due to bird strike the plane lost its two turbines. The Senior Captain Chesley ‘Sully’Sullenberger was told to return to the airport, but Sully, decided that the plane wouldn’t reach to the airport and landed an Airbus A230 with 155 passengers on the Hudson River and saved every passenger including the crew members. Sully was heralded by public and media at large for his remarkable accomplishment but simultaneously, he was under serious investigation from National Transportation Safety Board (the NTSB) in the United States, who revealed that the aircraft could have made it to the airport. Sully maintained his position stating that if they would have tried to land at the airport, the plane would have crashed.

But let’s tweak the situation here a little bit or preferably the whole of it, what if while trying to land at the airport, the plane crashed in between and there was severe damage to the ground as well as the lives of the passengers. Now, who is to be held responsible for a situation like this? Is the operator of the airplane or the owner/ lessor/financier? Similarly, who will decide the liability and how much? Let us read the article further to find out who’s liable for what?

Piercing the Liability Ceiling

The aviation industry has become ordinary to an extraordinary industry for a decade and a half. Amid this time interval, it is an established fact that there are privileges and liabilities attached to the airplane. Also, there are several parties involved in an aircraft such as the owner, the lessor, the financier and the operator. However, our main question is who is liable for the damage so inflicted by the airplane he owned or he was operating. It generally depends upon the theory of liability adopted by the country where the damage was caused.

Categorically, we can divide the liability theory into two broad categories; absolute liability and rules of torts and negligence. The idea of absolute liability of owner and operators of the aircraft for ground damage is an outcome from three bases which is applicable in common law countries. Primarily, absolute liability is imposed considering the innocent parties’ exposure to such danger. Secondly, the benefit arising from such activity that the aircraft owner derives from and the sheer helplessness of the ground victim arises absolute liability. Thirdly, the absolute liability will be imposed if the enterprise has the potential to distribute the loses the way they distribute benefits.

The countries who do not impose absolute liability through legislation or by way of precedents apply the rules of law of torts. The main principle applicable in cases of defining liability, the legal maxim Res Ipsa Loquitor play a critical role. The rule places its basis on the theory that the defendant having the control over the situation which caused damage, has the best view of determining the reason for such injury and the other party has the right to prove his negligence. In modern times, the maxim is used in aircrafts accidents such as inKadylak v. O’ Brien[i]where an airplane whilst doing a forced landing killed a boy. The court established that the claimant has to prove accused’s negligence prior to sorting any recovery for the death and since the aircraft operator had the control over instrumentality he has the burden of proving his freedom from fault. Additionally, there are cases where the legal maxim can be rejected in several cases such as:

Where party failed to prove that aircraft operator had exclusive control;

It is the unusual occurrence for an airplane to crash without human intervention;

Failed to prove operator’s negligence.

Considering the involvement of several parties in the aircraft such as the operator, owner/lessor or financier, the liability of each of them differs with their position and the control over the aircraft. The liability of each party is outlined as follows:

Liability of aircraft operator

Each treaty makes operators liable for death, substantial damage and mental damage (just compensable if credited explicitly to the harm via airplane and confirm by manifestations of an unmistakable mental disease), and in addition natural and property harm. No recuperation is taken into account correctional, model or non-compensatory harms. Operator obligation limits extend from 750,000 Special Drawing Rights (SDRs)(6) for an airplane measuring 500 kilograms (kg) to 700,000kg, to 7 billion SDRs for an airship weighing 500,000kg, per occasion. On the off chance that two unique operators caused the harm, they are together liable. Also, under several cases such asAir Transport Associates Inc. V. United States[ii] and Northwest Airlines V. Alaska Airlines[iii], the court invalidated the use of agreement purporting to dissolve the liability of the aircraft operator for the aircraft accidents caused by the operator due to his negligence. The court further mentioned that such an agreement is against the public policy as it has the indemnity clause which can set aside the liability of the operator even if he was negligent in his duty.

Liability of owner, lessor, and financers

The liability for harm to property and for injuries caused via airplane contact with the earth’s surface has been a matter of litigation. Regardless of whether the owner of the airplane has any obligation towards the occupants on the ground for the harms dispensed by a plane that he claims, relies on the hypothesis of risk that is embraced in the specific state where the plane causes the damage. Every country has the different set of rules for deciding the liability of the owner, lessor or financers for the damage caused to the third party. For example, in the U.S. a lessor, owner or financer is liable for the damage caused to the land and the innocent third party only in cases where the civil aircraft, the aircraft engine was completely in possession of the lessor or owner. Also, the damage was caused due to the aircraft or the engine. §44112 is applied to U.S. registered civil aircraft of lease for more than 30 days.

Lately, world occasions and financial conditions have constrained organizations that own, lease or finance the aircraft to inspect their risk if the owner of the aircraft is associated with a mischance or terrorist act, especially a calamitous one. Many loaning establishments, out of the blue, possess aircraft through repossessions or exercises that swapped obligation for value. These organizations end up worrying about the bona fides, capacity and general fortunes of the operators of the aircraft, also the litigation that takes after flight fiascos. While painstakingly drafted protection arrangements have been esteemed "satisfactory" to cover the obligation, the utilization of airplane as weapons of mass pulverization has caused a re-assessment of risk issues.

Liability for ground damage

In the Ground Damage Convention as far as possible are appropriate just if the operator can demonstrate that (I) it was not careless and did not act wrongfully, or (ii) the demonstration of someone else caused the harm. Regardless, the operator bears the weight of verification to demonstrate that it was not to blame. Under the Unlawful Interference Convention, if the aggregate harms for an occasion surpass the cutoff points put forward in that (counting extra pay from the reserve, as portrayed underneath), the weight of verification rests with the casualty, who must demonstrate that the operator added to the event of the occasion with the goal to cause harm, or acted heedlessly and with information that harm would most likely outcome. Regardless of whether it is resolved that the harm comes about because of the activities of a representative of the operator, the operator can in any case dodge extra obligation by demonstrating that it is possible that it had a fitting framework for choice and checking of workers set up, or that it acted in consistency with security prerequisites under the Chicago Convention.

UAE and Aviation

The UAE has signed the Montreal Convention 1999 (theConvention), which thus is authorized by UAE by virtue of Federal Decree No. 13 of 2000 Ratifying the Convention for the Unification of Certain Rules for International Carriage via Air (Montreal Convention 1999) (the Federal Decree). It has been in compelling in the UAE since 4 November 2003. The Convention applies to all instances of worldwide carriage of people, stuff or freight performed by an airplane for remunerating, with a carriage having its starting point and goal in two diverse contracting states or a solitary state with round trek carriage with a concurred halting spot in another state. On account of mishaps, real damage or demise on an aircraft, the pertinent arrangement which is to be taken into consideration under Article 17of theConvention which gives that 'the carrier is at liable for harm supported if there should arise an occurrence of death or substantial damage of a traveller upon condition just that the mischance which caused the passing or damage occurred on load up the airplane or over the span of any of the operations of leaving or landing.

The General Civil Aviation Authority (the GCAA) in UAE is the authority concerned for the Aviation sector in the nation. Also, the Civil Aviation Regulation Part VI- Chapter 3 concerning Air Accidents and Incidents Investigations (the CAR part VI). Under CAR part VI Air Accident Investigation Sector (the AAIS) will be established as a unit of GCAA in order to perform the investigations in air accidents or selected incidents. However, any investigation made by AAIS will not be used for any judicial or administrative proceedings for imposing liability on the aircraft operator or owner.

Defenses

The selection of similar normal standards of torts for damage caused via aircraft, as are pertinent ashore, furnishes the litigant aircraft owner with similar protections that are allowed in traditional tort circumstances. The defendant has a far more prominent capacity to keep up a resistance in these jurisdictions than he would have in a jurisdiction that authorizes liability, on the grounds that in these purviews the defendant has no protection with the exception of contributory negligence by the plaintiff. Negligence does not need to be appeared to make the defendant at risk for all harms.

Act of God

A demonstration of God is a legitimate protection to an air crash negligence where the common principles of land torts have been received. InJohnson v. Western Air Express Corp., it was held that the calamity happened due to the irregular powers of nature and that it couldn't have been sensibly foreseen, made preparations for, or stood up to. The defendant’s airline enterprise was hence not dependable. This is rather than Prentiss v. National Airlines where the court in an outright risk state would not engage the safeguard of demonstration of God.

Bailment

In states where the ordinary rules relevant for torts represent the obligation of owners, lessees, or operators of airplane, the way that the proprietor of the flying machine leased or lent the airplane to another does not make the owner subject for damages if there should arise an occurrence of bailment where he has not been careless. Only if the owner was negligent himself or if there was an agency relationship can be held at risk for ground harm caused by the pilot. The essential case of an aircraft bailment is Boyd v. White. For this situation, which emerged in an expression that applies similar guidelines of tort for the aircraft obligation with respect to customary tort activities, the owner leased the plane to a flying instructor knowing it would be flown by an understudy pilot. The student pilot and the teacher were held subject to the ground harm caused by the careless operation of the plant yet the court confirmed the nonsuit for the respondent plane owner.

International status

The Rome Convention, marked in 1952, addresses rights of the third party which experienced harm and damages from an event involving the aircraft. Similar to the treaties the addresses liability for traveler damage, the Rome Convention built up operator liability limits for harm caused on the ground. The size of the airplane decides the points of confinement founded. Nonetheless, the Rome Convention never got across the board acceptance. The Ground Damage Convention tries to modernize and supersede the Rome Convention. It accommodates strict obligation of operators to remunerate casualties of harm on the ground from aircraft going on an international route, other than because of a demonstration of unlawful obstruction, in a nation that has signed the Convention.

Conclusion

While no lease, or treaty, can completely assure the owner/lessor/operator of an airplane that a claim won't be affirmed against it. The courts are yet to witness cases where the owner/lessor or operator will be solely held liable for their negligent actions.

STA (the Firm) represents a group of internationally qualified counsels. STA Law Firm Limited is a company incorporated pursuant to Abu Dhabi Global Market Companies Regulations. STA Legal Consultants FZC is incorporated pursuant to applicable federal and local laws of Ras Al Khaimah.

The Firm operates in other jurisdictions through its affiliates and associated offices. The Firm has a presence across the UAE and its branch in the Emirate of Abu Dhabi (regulated by Abu Dhabi Judicial Department). The Firm’s trademark and intellectual property is assigned in favor of the affiliates for all purposes in accordance with the assignment agreement. Firm’s Luxembourg and Moscow offices are regulated by the jurisdictional regulations.